Tale of Two States: Using Least-Squares k-Variable Adjudication Methodology (kVAM) to Interpret Economic Growth In Texas and California

Recent news reports assert that Texas is growing economically but California is not. Based on their Gross State Product, both states are growing but Texas is growing faster on a per-capita basis. To understand what drives economic growth for each state, over 50 years of annual state-level data is collected on 486 growth-related variables to build 44 regression models for each state and the U. S. over various time frames. The results and the dominant factors are compared. This research uses a new variable-reduction approach, the k-variable Adjudication Methodology (kVAM), a mixed-integer, nonlinear programming technique that optimizes classic statistical goodness-of-t measures to identify dominant economic factors. The results provide policymakers new insights into the underpinnings of economic growth (both short-term and long-term) within each state and at the U. S. national level.